Resale prices in franchising: insights from franchisee perspectives

Abstract

Purpose The purpose of this paper is to offer a novel perspective on resale pricing in franchising, i.e. from a franchisee perspective, by combining legal and managerial considerations in the European context. The objective is to assess franchisee perceptions regarding resale pricing in their chains. Design/methodology/approach The authors adopt a qualitative approach and use 46 in-depth interviews with franchisees covering retail and service industries in the French market. Findings Many of the interviewed franchisees believe that joining a franchise chain involves respecting the recommended resale prices. For some of the franchisees, in link with the chain uniformity, imposing uniform resale prices throughout the chain represents a strength, because customers who visit different stores within the franchise chain expect to find consistent pricing. Moreover, many franchisees consider that their franchisors have some know-how that they use to set correct resale prices, taking into account the profit margin. Research limitations/implications This research contributes to the literature on resale pricing in franchising, as well as the franchising literature in general, by combining legal and managerial considerations, adopting a franchisee perspective, covering retail and service industries and focusing on French and European markets. Practical implications This research can be viewed by franchise experts, franchisors, franchisees and franchisee candidates as a synthesis of resale price-related legal aspects, adopted practices and potential conflicts in franchise chains in the French market. It also highlights price-related practices to be avoided to prevent potential conflicts. Originality/value The subject of resale pricing in franchise chains is a hot topic, because of its link with customer attraction, chain uniformity, franchisor know-how, franchisee autonomy and the legal dimension.